RBI brings forward FCNR(B) deposit deadline amid strong inflows

The RBI will prematurely close the deposit mobilisation window for FCNR(B) deposits on August 31, 2026, a month earlier than planned. The decision follows a strong response, with forex inflows under the special facility reaching $56.846 billion.

The Reserve Bank of India (RBI) has decided to prematurely close the deposit mobilisation window under its special forex swap facility for Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, bringing forward the deadline for banks to mobilise such deposits to August 31, 2026.

The decision comes after the facility received an encouraging response, with foreign currency inflows through FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs) reaching USD 56.846 billion as of August 13, according to the RBI.

Details of the Revised Schedule

The special USD-INR forex swap facility covering FCNR(B) deposits, ECBs and OFCB inflows was introduced by the central bank on June 8, 2026. Under the original schedule, eligible FCNR(B) deposits could be mobilised by banks until September 30, 2026, while authorised dealer banks were originally allowed to execute the USD-INR forex swap transactions with the RBI until October 16, 2026.

The RBI has now brought forward the FCNR(B) deposit mobilisation deadline by a month. Under the revised timeline, FCNR(B) deposits can be mobilised only until August 31, 2026. However, swaps against these FCNR(B) deposits can still be availed with the RBI until September 11, 2026.

Breakdown of Forex Inflows

The RBI said the decision was taken based on the encouraging response to the swap facility for FCNR(B) deposits and the resultant forex inflows. Data reported by authorised dealer banks showed that FCNR(B) deposits accounted for the bulk of the inflows under the facility. As of August 13, FCNR(B) deposits stood at USD 52.3 billion. The inflows through OFCBs stood at USD 2.805 billion, while ECBs contributed another USD 1.741 billion. Together, the three channels brought total forex inflows to USD 56.846 billion under the facility.

Status of ECB and OFCB Schemes

While the RBI has decided to close the FCNR(B) mobilisation window earlier than originally scheduled, the schemes for ECBs and OFCBs will continue to remain open until December 31, 2026, as announced earlier. The move therefore specifically changes the timeline for FCNR(B) deposits, while leaving the existing timeline for ECB and OFCB inflows unchanged.

The RBI had introduced the special forex swap facility as a mechanism covering these foreign currency inflows. Under the facility, banks mobilising eligible FCNR(B) deposits can avail themselves of the swap arrangement with the central bank.

With the revised deadline, banks now have until August 31 to mobilise eligible FCNR(B) deposits. The corresponding swaps can be undertaken with the RBI until September 11, giving banks additional time after the deposit mobilisation window closes to complete the swap transactions.

The RBI's latest announcement comes after the facility generated USD 56.846 billion in total reported forex inflows by August 13, with FCNR(B) deposits making up more than USD 52 billion of the total. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)